The founder of China’s leading bottled water giant, Zhong Shanshan, was again recognized as China’s wealthiest individual for a fourth straight year.
On March 25, the Hurun Research Institute announced that Zhong Shanshan, the founder of Nongfu Spring, was China’s wealthiest individual for the fourth year. Mr. Zhong’s overall wealth fell 9 percent to $63 billion compared to the previous year, dropping his global ranking six spots to number 21. The drop occurred amidst his scrutiny by online nationalists, which threatened the sustainability of Nongfu Spring water, as well as the decline in performance by Wantai BioPharm, another entity owned by Mr. Zhong that produces diagnostic tests and vaccines.
Mr. Zhong’s prosperity was aided by his unwavering resilience and adaptability. He was born in 1954 in Hangzhou, Zhejiang Province. During the Cultural Revolution, he dropped out of primary school at age 12 to work as a construction laborer and carpenter. He completed his education through distance learning before becoming a journalist and a serial entrepreneur.
His entrepreneurial endeavors spanned multiple industries, from mushroom farming to curtain sales, until he found success in the healthcare supplement sector. His launch of Nongfu Spring in 1996 marked a pivotal moment, propelling him to prominence as the leading force in China’s bottled water industry from 2012 through 2019.
The listing of Nongfu Spring on the Hong Kong Stock Exchange in September 2020 catapulted Mr. Zhong to new heights, surpassing industry titans like Jack Ma of Alibaba to claim the mantle of China’s wealthiest individual and Asia’s richest person, surpassing even India’s Mukesh Ambani.
Despite his massive success, Mr. Zhong maintains a private persona, admitting to struggles with interpersonal relations while highlighting his prowess in media and marketing. His wealth primarily stems from his holdings in Nongfu Spring and Wantai BioPharm, with the former enjoying steady performance while the latter faced setbacks, evidenced by a 30 percent decline in stock price over the past year, resulting in an overall decrease in Mr. Zhong’s accumulated wealth.
Ventures Into Vaccine Production
In 2001, Mr. Zhong acquired 95 percent of Wantai BioPharm’s shares for 17.1 million yuan (approximately $2.4 million). He commenced research toward the development of human papillomavirus (HPV) vaccines designed to prevent infection by certain types of human papillomavirus (HPV), which is widespread, causing warts and even cervical cancer. The HPV vaccine stands as the sole preventive measure against this virus. Notably, China ranks second globally in cervical cancer incidence.In 2019, Wantai BioPharm’s domestically developed bivalent HPV vaccine received market approval, marking China’s first domestically produced HPV vaccine. Following its public listing on the A-share market in April 2020, Wantai BioPharm’s market value soared to over one trillion yuan (approximately $139 billion) within three months.
May 2020 saw the official launch of the bivalent HPV vaccine “Cecolin,” positioning Wantai BioPharm as China’s pioneer HPV vaccine manufacturer and the third largest globally.
The term “valency” refers to the number of HPV virus types targeted by the vaccine. Higher valency translates to broader protection. While the nine-valent vaccine can prevent 92 percent of cervical cancers, the bivalent and quadrivalent vaccines offer 69 percent prevention.
The bivalent HPV vaccine swiftly emerged as a lucrative asset for Wantai BioPharm. By 2021, the company’s total revenue surged to approximately $800 million, a staggering 144.25 percent year-on-year increase. By 2022, Wantai BioPharm commanded a formidable 44 percent share of the Chinese market, with total revenue exceeding $1.4 billion.
However, domestic competition intensified. In March 2022, Wantai BioPharm’s recombinant bivalent HPV vaccine hit the market, triggering a price war. Publicly available vaccine procurement records revealed a drastic reduction in its HPV vaccine price, plummeting from 329 yuan per dose in 2022 to its current 116 yuan per dose.
The landscape further shifted with multinational giant Merck expanding the age range and supply quantity of its nine-valent HPV vaccine in China, significantly impacting sales of domestically produced bivalent HPV vaccines.
Wantai BioPharm faced challenges in 2023, with lower-than-expected sales and a notable decline in revenue, particularly from in-Uvitro diagnostics. Net profit for 2023 is projected to plummet by 70 percent year-on-year, from $658 million to an estimated $167-188 million. Revenue from the bivalent HPV vaccine saw a staggering drop of approximately $583 million compared to the previous year.
On January 9, Merck China announced the approval of its two-dose regimen of the nine-valent HPV vaccine for females aged 9 to 14 by the China National Medical Products Administration, a move perceived as a “price reduction” by industry observers.
Beyond the bivalent HPV vaccine, Mr. Zhong collaboration with Xiamen University has led to the development of other vaccines, including the nine-valent HPV vaccine currently in Phase III clinical trials. Wantai BioPharm’s commercial production layout for the nine-valent HPV vaccine is underway, with the completion of the first phase of two raw material production lines.
Furthermore, Wantai BioPharm’s 20-valent pneumococcal polysaccharide conjugate vaccine has entered Phase I clinical trials, while its varicella-attenuated live vaccine has obtained Phase III clinical trial research reports. The hepatitis E vaccine has been approved for sale in China and Pakistan.
With high gross profit margins, vaccine production remains a promising sector. Nongfu Spring reported a gross profit margin of 60 percent from January to June 2023, while Wantai BioPharm’s gross profit margin reached an impressive 88 percent from January to September.
Unfolding Crisis
On the evening of March 26, Nongfu Spring announced its performance for 2023. Total revenues exceeded forty billion yuan (approximately $5.6 billion) for the first time, a 28.4 percent year-on-year increase.Mr. Zhong remains focused on Nongfu Spring’s performance compared to Wantai BioPharm. The company has established twelve water sources nationwide and maintains a leading position in the bottled water market.
However, the aftermath of the public scrutiny against Zhong and Nongfu Spring in March of this year has not subsided. The daily sales volume of some e-commerce channels for Nongfu Spring has plummeted by over 90 percent. Multiple products have faced boycotts from merchants, leading to an overall decline in stock prices.
From personal attacks on Mr. Zhong to accusations that Nongfu Spring’s packaging design is “insulting to China and pandering to Japan” to involving his family, Mr. Zhong’s son, Zhong Shuzi, being a U.S. citizen, has become a focal point of the controversy.
In November of last year, there were reports that Nongfu Spring had reorganized the establishment of the Hangzhou region in Zhejiang, placing 36-year-old Zhong Shuzi as the head. At age eight, young Zhong left China to go to school in the United States. Ten years later, he published a collection of English poems. In 2011, he graduated with a bachelor’s degree from the University of California and then obtained his MBA from Zhejiang University. He has spent the last ten years with Nongfu Spring.
Lai Jianping, a former Beijing lawyer and current Chair of the Canada Branch of the Democracy Party, recently told The Epoch Times that the Chinese Communist Party (CCP) is behind the turmoil that Nongfu Spring is enduring. He suggests that since the Chinese government lacks financial resources, the CCP seeks to extort money by forcing the donation of large sums of money to avert disasters. Implied is the warning that if Nongfu Spring refuses to donate, the CCP will “campaign” against them. In any case, the CCP does not allow private enterprises to become large and strong, as this would make it increasingly difficult when attempting to control them.
YouTuber Jiang Feng, offers a unique perspective on the CCP’s motives for bullying Mr. Zhong. He suggests the CCP sees the potential for financial relief through Wantai BioPharm’s high-tech assets and tremendous revenue potential. Until the CCP gets what it wants, Mr. Zhong will continue to feel the pressure.
